Hydration isotherm and dielectric measurements have been used to study the water interactions in biological materials and in particular the role of water in protein structure, dynamics and biological function. This study has employed these techniques in conjunction with enzymatic activity assays to investigate the relationship between protection of proteins by sugars against thermal and dehydration-induced denaturation, and the extent of direct interaction through hydrogen bonding and glass formation. Two proteins with different structures and biological functions have been considered; ,B-lactoglobulin and trypsin. The preservative properties of three carbohydrates, trehalose, sucrose and 2-,B-hydroxypropyl-cyclodextrin have been studied. Data obtained in this work indicate that protein and sugars may interact through hydrogen bonding and that the structural state of the sugars (i.e. crystalline or amorphous) determines whether or not this interaction occurs. Trypsin formulations showed that hydrogen bond interaction is directly responsible for the preservation effect whereas the role of the glass forming properties of the sugars could not be related to the extent of the protection.